How to Write Effective Automation Proposals
The subtle art of being specific enough to explain, yet vague enough to protect…
The Art of the Proposal
Writing proposals for automation equipment is an art. You want to be specific enough about your ideas that it creates confidence with the customer and allow them to fully understand what is being offered. At the same time, this is custom automation, and things change. You need to be vague enough to low yourself some freedom to change the final design (within reason). Furthermore you don’t want to give away the “secret sauce” in your design before the customer has agreed to buy.
I’ve written about quoting projects in another article. Those are the numbers; how you arrive at the price. The proposal is the written word (not a favorite with a lot of engineers). This is perhaps even MORE important than the quote. It explains to the customers exactly what they are (and just as importantly) what they are NOT getting as part of the project.
You should not skimp on the proposal. I’ve seen a few proposals for $1M+ machines that were 2 pages long. I’ve seen them done in Excel before (unless you are selling a pre-engineered, configurable solution don’t do this). You MUST put time and effort into this part of the sales process. It’s the last thing the customer will get from you before they issue a PO. Why do all the work up front in the concepting and quoting only to fall short on the proposal?
My proposals were typically 5-10 pages long (longer if there were lots of exceptions) plus 2-3 more pages of terms & conditions. You can boilerplate some of the proposal but a lot will be custom written for each project.
If you need assistance with your quote or proposal process please reach out to me at the end of this article to see how I can help you be more efficient and clear in your offerings to your customers.
Types of Proposals
Like quotes I have a belief that there should be three levels of proposal.
A ROM (Raw Order of Magnitude)
Budgetary
Firm
Just as you put more and more work into the quote as it progresses through these levels, you do the same with he written proposal.
A ROM quote (I call it an Executive Summary Proposal) will typically only have a few sections. A definition of the problem, a high level proposed solution, an estimated ROM price and a range of lead times. This is simply to explain to the customer that you do indeed have a concept, price, and lead time, but that until they are closer to issuing a PO that you’re not spending a lot of brain cycles on this project.
A Budgetary and Firm are going to be very similar in terms of sections (which I’ll go into in more detail below). However again the amount of depth in each section will be different. The main difference between Budgetary is the investment range (typically +/- 20-25%) and lead time projections (I might be a +/- 8 weeks on Budgetary, +/- 4 weeks on a Firm)
Sections Of a Proposal
A good proposal is made up of several sections. Your own individual style will dictate the order (you may add more or combine some of these) but I feel that all good proposals need these sections.
Title Page
It seems obvious but I’ve seen proposals without them. Have a cover page that has your logo, the customer’s name and their logo, their contact info, revision information and title of the project (Always ask the customer if they have an internal name for the project. If you use the same language it’ll make it clearer to everyone).
System Description
This is a short section that describes the project. It explains what the customer is trying to do (assemble, glue, fold, package), what components and SKUs are being worked on (list them explicitly), how fast the machine is going to run (20ppm, 50ppm, 100ppm etc.) and any other higher level specifications about the project. Think of it is an abstract for a scientific paper. Also use this section to refer to any customer supplied documents (specs, rules, drawings etc.) so that you both know what was given and received.
System Components
This is where you list the major parts of the machine. It should match your quote sheet (see previous article) by major subassembly. Examples might be frame, dial indexer, robot with dual gripper end of arm tool and vibratory feeder bowl.. etc.. Briefly describe each component and/or subassembly.
In this section you can also include some boilerplate items like Project Management, Documentation, Controls Systems, FAT/SAT etc..
Notice I said “robot”. I did not call out a model (in some cases not even manufacturer). Unless you are 100% sure do not get too specific. Leave yourself some wiggle room in case you need to make a last minute change to the design. You don’t want to be locked into a larger robot than required if you can shrink the design.
Sequence of Operation
Describe in detail how the components will progress through the machine. I use a numbered list and walk through each station, line by line. An example might be something like:
The cap is feed via a vibratory feeder bowl into a singulating escpement.
Station 1 robot uses one of the dual EOT grippers to pick the cap from the torque station. It rotates and places the unprocessed cap (that it previously picked from the feeder bowl) into the torque station. The robot then places the torqued cap into the printing fixture. The process repeats by picking from the feeder bowl.
At the printing station an inkjet printer prints the serial # on…
Again, you want to paint enough of a photo in the mind of the reader that they understand the concept, yet not enough to give away your your secrets or to lock yourself into a highly specific design.
This section is especially useful to make sure your quote sheet has all the required items for that step and that nothing is missing.
I recall once writing a sequence of operation and realizing I had left an entire feeder bowl out of quote sheet. That would have been a $40k+ mistake.
Layout Drawing
This is one I have mixed feelings about. While I hate doing the extra work (especially for budgetary proposal), as they say, a picture is worth a thousand words. A high level, blocky CAD model with leaders pointing out the various substations and high level deliverables goes a long way to telling the story. Over the years I had my team build up a library of low detail models of robots, feeder bowls, frames, electrical enclosures etc. so that they could quickly make up a high level, blocky, CAD drawing pretty quickly. Anytime you get s new component (leak tester, welder etc) add it to the library.
Investment
This is the part of the proposal the customer will turn to first (I’ve watched them do it in front of me). All that hard work you did on the previous sections will be ignored if they price is not what they expected.
Pro tip: you should know what they are expecting BEFORE even sending a proposal. If you don’t you are potentially wasting a LOT of time and energy.
This investment (I like this better than “price”) will have a range depending on what level of quote you have. In fact depending on the project it may be T&M (time and materials).
Some customers will ask you to break out your pricing by station or by materials vs mechanical and controls labor. I’ve had customers send me Excel sheets with 20+ categories of costs they wanted filled out.
Don’t do this. I can sometimes understand them wanting initial engineering vs the machine cost so they can determine what a repeat machine might be (once you remove NRE - non reoccurring engineering). However, typically this is a purchasing agent who is trying to find somewhere to negotiate you down. The final decision is up to you, but I fought against this every time.
Lead Time (or Schedule)
This is the second section the customer will look at, and then usually loudly complain about. We’ve all been there… the customer drug the quoting process on for multiple months and now they are complaining about weeks in your lead time.
It’s important to have a realistic lead time RANGE in your proposal but it’s also important to let them know this estimate can change depending on when they order. If they wait another month you may have other sales that have taken these slots. Be explicit that an exact schedule will only be provided after the placement of the order.
They will also probably tell you hour competitor can do it faster (ridiculously faster).
I’ve had machines with 50 week lead times quoted for 20 weeks with other suppliers. 45-48.. sure I can buy that. It’s really and educated guess after all. But less than half the time? Bullshit.
Don’t fall prey to the lead time bidding war. Hold your ground and be honest. You both know that 20 week is a lie. That schedule will slip. But it looks very good to Hooper management who will just tell the PM to “hold them to their quote”. The problem is we all know he’ll be powerless to do that. It’ll end badly for everyone. Hold to your true lead times (and don’t let the salesman cave into to the customer).
Terms
This is sometimes the most argued about section (more so then investment and lead time).
You’ll typically break the project up into phases and have an associated progress payment with the milestone. I like to use 30/30/30/10:
30% deposit
30% after final design review
30% after FAT
10% after SAT or after shipment
I’ve also used 40/30/10/10/10 (add in a start of debug payment before FAT) and even 60/40 on build to print jobs. Get creative with the milestones in exchange for NET terms.
Don’t get creative with the NET terms. Many large corporations are moving to NET 120 and even 180 terms. Fight these. Fight them for yourself and for the industry as a whole. The more that agree to them will make them harder to fight. If you have no choice but to take these terms look into some factoring services or platforms like C2FO that pay out early for a small % fee (and tack that fee onto the cost of the machine).
I have an entire diatribe on NET 120/180 terms and large corporations. That maybe will have to be another article.
Assumptions & Exceptions
This is the section where you make sure that both you and the customer are 100% clear on anything that may come up later in the project. Typically in the URS, spec or RFQ there will be a number of rules and requirements as laid out by the customer. Many of these are normal and understandable. Others you will need to push back on or offer for an extra fee.
One example might be “The machine shall perform at an OEE of no less than 99%”. You’re going to want to take exception to this one. For one off custom automation machinery, 85% is considered world class. Don’t agree to near perfection. It won’t happen and most likely it won’t even be the machine’s fault (bad products, operator error, maintenance “fixing” things).
Watch out for oddball “preferred vendor” demands as well. I have had excellent luck at offering our “internal standards” for most items and then telling them I can quote their standards for extra money. Most of the time they will accept your standards. (Exceptions will be things like robots and PLCs etc.. those you cannot typically sway too much.)
There are two schools of though on listing exceptions. Some people like to turn on “track changes” in the Word doc and make the edits and comments right in the spec. This method allows you to come up with a clean spec before placing the order.
The other is to refer to the section (e.g. 2.a.1) and then state why you re not complying. This is a bit easier, but also places it directly in the proposal document where it cannot be missed.
I like to do both. It makes sure that both documents have the same info and no one can claim they did not see the “other document”. The list in the proposal is an “overview” while the changes in the URS itself are the details.
The other half of this section, “Assumptions” are not stating you will not do something explicitly but rather framing and clarifying your thinking. For example you might make the assumption that the parts will match the drawings and be flat within X tolerance. If they are not then they won’t feed. If the parts are within spec and flat the customer should have no issue agreeing to something like this. If the parts come in and they are not flat then you are protected.
In your assumptions also include the things that are not included e.g. freight, insurance, CE or UL, cost for install (unless it is), detailed CAD models (unless they are) and so on.
Brand Promise
This is a chance for you to point out all the reasons why your customer should be working with you. Examples are your quality statement, notes about your facilities or labor force, how often you will have project and schedule updates, what is to be expected at FAT and SAT and more.
Project Expectations
This is your chance to tell the customer what THEY are required to do/provide to make this a successful project. This can include items like, on time payments, on time decisions, hitting their milestones for samples, documentation, drawings, machine acceptance terms and so forth. You should also spell out the consequences of not fulfilling these requirements which may include change orders, slippage of schedule, storage fees and more.
Call to Action
Wrap it up with a request for the order. ALWAYS ASK FOR THE ORDER. Be polite and respectful and let them know you value their business… but that you WANT the business.
Terms & Conditions
All the (important) legal mumbo jumbo that every contract has. It spells out terms, legal remedies, cancellation clauses etc. This is unique to every company and you need to be sure to have your lawyer involved when writing them.
Quick side note: When you accept a PO from a customer, their terms prevail if they are in conflict. Many people do not understand this concept. If the PO states NET 180 but the proposal says NET 30 and you accept the PO, you are agreeing to NET 180. Other gotchas can be penalty or cancelation clauses. Be sure to read all the PO terms very carefully before you agree to accept the order.
If this is a customer with whom you do a lot of work consider setting up a MSA (Master Service Agreement) which defines a lot of these items for ALL projects. That way you don’t need to worry about each PO nice the agreement is in place.
Conclusion
A well written proposal can be the difference between wining and losing an order. It takes a lot of work to explain to the customer how their machine is to work and function, but having the work defined up front will save you from a huge headache later in the project when there is something ambitious on which you and the client disagree. Spend the time up front.
Oh and be sure to hire an awesome applications and sales team. I know I did!
The Automation Navigator is brought to you by Automation AMA, a company founded and run by an industry leader in assembly, robotics and packaging. Automation AMA offers a variety of services to help you on your automation journey or to help fine tune your engineering, sales, operations and business development departments. Learn more at www.automationAMA.com or shoot me an introductory email.
Excellent read. I have landed on many of the same principles and methods over 30+ years. Good to know there is another one out there with similar views.